M: Cathy, chaos theory seems to be a branch of physics or mathematics.
You are an economist, so how does it influence your work?
W: Well, in several ways.
I'm responsible for financial development programs in many parts of the world, so forecasting long range trends and making predictions on the basis of present evidence is what I do.
Chaos theory was developed by scientists trying to explain the movement of the planets and changes in environmental conditions.
Both of these things are also about making long term predictions on the basis of present evidence.
M: Are many economists involved in this field?
W: An increasing number.
In the 1990s, many economists began to look at chaos theory as a way of providing models for forecasting.
M: What kind of "models" are we talking about here?
W: Well, that's a good question.
Because the basic idea of chaos theory is that there aren't any "models" as such—there aren't guaranteed forms, but rather patterns of change and development.
M: Doesn't that mean that forecasting is impossible?
W: No, but it certainly makes it more of a challenge.
Mandelbrot, who did the experiment with stock exchange prices, for example, noted that although the outcomes were variable, there were in fact certain constants.
What we have to do is make sure we know what these are and take into account all the possible valuables.
M: But do economics and finance work in the same way as weather conditions or the movement of plants?
W: Well, no, of course not.
There are certain underlying similarities.
But we have to leave them for another time.
Questions 5 to 8 are based on the conversation you have just heard.
5. What is the woman's profession?
6. What was chaos theory supposed to do when it was first formulated?
7. What does the woman say about the basic idea of chaos theory?
8. What are the speakers mainly talking about?
